Buying Time, Greece To Bundle IMF Payments

Published at18:45, Jun 04 2015

ATHENS — Greece took up its right June 4 to bundle together the four payments it has to make to the International Monetary Fund in June into one at the end of the month — a sign that Greece is struggling to make ends meet.

The request, which is allowed by IMF rules but hasn’t been used by any country for decades, came as Greece struggles to make headway in protracted bailout discussions with its international creditors. They have to give their blessing to a Greek reform package before vital bailout loans are released.

“The Greek authorities have informed the Fund today that they plan to bundle the country’s four June payments into one, which is now due on June 30,” said IMF spokesman Gerry Rice.

“The decision was intended to address the administrative difficulty of making multiple payments in a short period.”

Under an IMF rule from the 1970s, countries can ask to bundle together multiple payments if they fall within a single calendar month. Not since Zambia in the mid-1980s has a country made the request, according to the IMF.

Still, the request buys the Greek government some time. Its first payment of a little more than 300 million euros ($340 million) was due on June 5. Its four payments due to the IMF this month total 1.6 billion euros.

Greece has bigger payments due to the European Central Bank this summer, and can’t meet them without rescue money.

It would then face the prospect of going bankrupt, being unable to repay its creditors or pay pensions and public sector salaries — a possible prelude to the country crashing out of the euro and returning to a devalued version of its old drachma currency.

The postponement does not appear to impact Greek banks’ ability to draw on vital emergency credit from the Greek central bank, as permitted by the European Central Bank.

An ECB spokesman declined to comment on the move. Earlier June 4, Greece conceded it has to overcome major disagreements with creditors before it can get its hands on the money.

Prime Minister Alexis Tsipras failed to break the deadlock in Brussels at a late-night meeting with Jean-Claude Juncker, the president of the European Union’s executive arm.

That disappointed investors across Europe, with the main Athens stock market unsurprisingly bearing the brunt of the selling, closing down 1.3 percent.

Tsipras noted progress had been made on the scale of the budget surplus that Athens has to meet —effectively the lower the surplus the country has to post the less Draconian the budget measures have to be.

But he said lingering disagreements over other key issues, such as proposed sales tax hikes and pension cuts, mean that an agreement is not ready.

The Greek government, elected in January on a promise to end the hated-austerity that creditors have demanded in return for bailout cash over the past five years, needs the release of a remaining 7.2 billion euros ($8.2 billion) to pay upcoming big summer debt payments. To access the money it needs creditors to agree to an economic program.

At an emergency meeting June 4 with ministers, Tsipras called a parliamentary debate for June 5 on the course of the bailout negotiations.

SYRIZA governs in a coalition with the right-wing Independent Greeks. The coalition has a majority of 12 seats in the 300-member Greek parliament. The growing dissent in his party has fueled talk of another snap election.

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By Nicholas Paphitis and Derek Gatopoulos. Elena Becatoros in Athens and David McHugh in Frankfurt contributed